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7/27/2010 Deferred Compensation Program Presentation LEOFF Plan 2 Retirement Board July 28, 2010 Brian Berghoff, DCP Administrator Department of Retirement Systems WASHINGTON STATE Deferred Compensation Program What is the Washington

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7/27/2010 1 Deferred Compensation Program Presentation LEOFF Plan 2 Retirement Board July 28, 2010

Brian Berghoff, DCP Administrator Department of Retirement Systems

– WASHINGTON STATE –

Deferred Compensation Program

What is the Washington State Deferred Compensation Program?

An IRS 457(b) supplemental retirement savings

investment plan

– Similar to a 401(k), Private Sector – Similar to a 403(b), Non-Profit

Offered by Washington State

– DRS administers DCP – WSIB selects and monitors investment options

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What is the Washington State Deferred Compensation Program?

Available to Public Employees of:

– State Agencies – Higher Education Institutions – Political Sub Divisions if employer has signed resolution adopting DCP

What is the Washington State Deferred Compensation Program?

Voluntary Program
Reduces current taxable income
Account savings grow on a tax-deferred basis
DCP fees are typically lower than other plans
We do not offer loans - some plans do

– Hardship withdrawals are available

Deferred Compensation Program

1,317 retirement system employers
1,017 DCP participating employers
Over 53,000 participants
Over $2.6 billion in assets

– As of June 30, 2010

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LEOFF Plan 2 374 LEOFF Plan 2 Employers – 16,887 employees

144 Fire Protection Districts
39 Counties
177 Cities and Towns
14 Other

LEOFF Plan 2 – Active DCP Employers 227 LEOFF Plan 2 DCP Employers - 5,462 employees

85 Fire Protection Districts
22 Counties
110 Cities and Towns
10 Other

LEOFF Plan 2 – Fire Protection Districts

144 Fire Protection Districts - 3,563 total employees

FPDs in DCP – 85

– 2,075 employees

– 907 participants – 44%

FPDs not participating in DCP – 59

– 1,488 employees

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LEOFF Plan 2 – Counties 39 Counties – 2,831 total employees

Counties in DCP – 22

– 662 employees

– 76 participants – 11%

Non-DCP counties – 17

– 2,169 employees LEOFF Plan 2 – Cities and Towns 177 Cities/Towns – 10,052, total employees

Cities/Towns in DCP – 110

– 2,494 employees

– 617 participants – 25%

Non-DCP Counties – 67

– 7,558 employees LEOFF Plan 2 – Miscellaneous 14 Miscellaneous – 441, total employees

In DCP – 10

– 231 employees

– 103 participants – 45%

Non-DCP – 4

– 210 employees

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LEOFF Plan 2 and DCP – Statistics Total LEOFF 2 employers – 374

61% have joined DCP: 227
39% do not participate in DCP: 147

Total LEOFF 2 employees – 16,887

32% - DCP participants – 5,462
68% - Not in DCP – 11,425
Regular annual deferral

$16,500

Monthly deferral

$ 1,375

50+ annual catch-up

$22,000

Monthly deferral

$ 1,833

3-year catch-up provision

$33,000

From normal retirement

Maximum Deferral - 2010 It’s Smart! Employees

Defer Federal Income Tax
Tax-deferred growth
Dollar cost averaging
Low Administrative Fee .14%

–No sales commissions –No transaction fees

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No Penalties for Early Withdrawals

– No 10% penalty if younger than 59 ½

Washington State Investment Board

– Selects investment options

– Monitors fund managers It’s Smart! Employees

Simple enrollment process
Automatic payroll deduction
You decide how much

– Minimum contribution $30 per month

– Maximum contribution $16,500 per year

Change your deferral amount any time

It’s Easy! Employees Employee/Participant Resources

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Employee Resources

Employee benefit package

– Take advantage of this program – Positive effect on recruitment and retention

Administration

– No direct costs – Reporting method used for LEOFF can be used for DCP

Employer match

It’s Smart! Employers

Washington State Investment Board

– Selects investment options – Monitors fund managers

Can contact DRS for support when necessary

– Training, Education and to Increase Awareness – Reporting questions – Supplies such as Publications

It’s Easy! Employers

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Employer Resources Our goal - “Increase awareness and knowledge in support of better retirement planning.”

The E&O team travels across the state to:

– Increase awareness of retirement benefits – To promote retirement education for employers and their employees Education and Outreach

On-site presentations

– DCP

– Retirement

On-site one-on-one appointments

–Employees –Employers

New Employee Orientation
Benefit fairs

Education and Outreach

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Host retirement seminars around the state

specially designed for members who are within five years of retirement. These informational seminars cover:

–Social Security –VEBA –PEBB Health Insurance –Retirement system benefits –DCP

Education and Outreach

Learn how the Education and Outreach team

can help employers and their employees – Schedule a presentation – new employee orientation – one-on-one appointments Contact the Education and Outreach team at:

360-664-7000 ext 47115 or 800-547-6657 ext 47115

Education and Outreach Employer Investment Options

Two different approaches to investing

– One-Step Investing – Build and Monitor

Ten fund options to choose from

– 9 fund choices – 12 Retirement Strategy Funds

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One Step Investing - Retirement Strategy Funds

– Diversification – Automatic rebalancing – Adjusts your asset mix as you move toward your target date Investment Options Investment Options – Retirement Strategy

Build and Monitor

– A full spectrum of investment choices for people who want to take a more hands-on approach with their portfolio Investment Options – Build and Monitor

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The Savings Pool
Washington State Bond Fund
Washington State Social Balanced Fund
Active US Value Stock Fund
U.S. Stock Market Index Fund
Active US Core Stock Fund
Fidelity Growth Company Fund
U.S. Small Stock Index Fund
International Stock Fund

Less potential risk / return More potential risk / return

Investment Options – Build and Monitor

Separate from Service or Retirement

– Lump sum – Installments – Partial lump sum & installments – Annuity purchase – Rollovers – Death – balance to beneficiaries – No IRS early withdrawal penalties Distribution Options Discover The Smart, Easy Way to Save

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